Xanterra: Key Player in National Parks’ Future
Andrew Todd wanted to captain more than just the nation’s largest park-concessions-management company.
And when Denver businessman Philip Anschutz purchased Xanterra Parks & Resorts in 2008, Todd got his wish. In the past few years, the venerable company has grown its revenues by 50% with acquisitions that include a high-end cruise-ship line, an adventure-travel company, a hotel and a golf resort with real estate it plans to develop, the Denver Post reported.
After more than a century focused solely on national-park-concessions contracts — a business strategy that often saw the company waiting for new National Park Service contracts to emerge — the new business direction has injected fresh life into Xanterra, which traces its roots to the Fred Harvey Co. in 1876.
“There wasn’t a great appetite from the previous ownership to expand beyond our core,” said Todd, who next year will mark his 20th year at the helm of Xanterra. “The good thing with the Anschutz Co. is that they have the capital and Phil’s willingness to invest and expand beyond our core business. With him, we can be very nimble and very quick on deals.”
Xanterra purchased the 1,025-acre, three-golf-course Kingsmill Resort in Williamsburg, Va., in 2010, marking its first step outside national parks. A year later, the Greenwood Village company affirmed its move beyond national parks with the purchase of Windstar Cruises.
This year, it added cruise company Seabourn’s three small luxury cruise ships to the Windstar fleet, rescuing the ships from financial distress. The company pumped $18 million into upgrades on the high-end sailing ships, and bookings have been climbing at double-digit percentages. Windstar has posted four consecutive years of revenue growth.
Also this year, Xanterra acquired undeveloped land in Kingsmill Resort, with plans for cottages along the James River and single-family homes along the resort’s golf courses. That’s the first move toward residential real-estate development for Xanterra, which has built lodging and dining facilities inside national parks.
“Once we got there, we kind of serendipitously discovered some prime real estate that hadn’t been developed,” Todd said. “That’s where we are going now because we think there is great value in the real estate.”
Kingsmill was originally developed by Anheuser-Busch more than 25 years ago, but the brewer’s tack changed when it was acquired in 2008 by InBev. The two years before Xanterra bought the resort in 2010 spurred uncertainty, and the local real estate market softened, said longtime Kingsmill broker Tim Parker.
Parker said Xanterra’s 10-year plan for the resort “was welcomed with open arms by the community.”
“They intend to make Kingsmill one of the best destination resorts on the East Coast and plan to spend money to make big improvements to the property,” Parker said. “They appear to have a desire to be a good community partner, and Kingsmill residents are excited about our future once again.”
Todd relishes opportunities to expand beyond park concessions. His company’s contracts with the National Park Service’s Yellowstone, Grand Canyon, Zion, Crater Lake, Rocky Mountain, Death Valley, Mount Rushmore and Petrified Forest properties are tightly controlled, with the park service capping lodging rates and food costs in deals that require significant investment.
In February, the company won a 20-year contract to manage tourist operations at Yellowstone National Park, which it has run since 2005. The new deal is big. It includes managing more than 1,000 lodge rooms and more than 1,000 cabins, all of which boast an industry-defying 90% to 100% occupancy rate.
The new deal upped Xanterra’s franchise fee — the amount it pays the federal government — from 2.5% to 4.5% of total revenues and required that Xanterra hold 6% of its annual gross receipts in a repair-and-maintenance reserve account, down from 11.5% in its previous contract. The contract also requires that the company spend $134.5 million on facilities improvements, including $70.5 million to replace 407 guest rooms in five new lodges in the park’s Canyon area by 2018.
Park Service records show Xanterra generated $79 million in 2009, $86 million in 2010 and $89 million in 2011 from its operations at Yellowstone, which hosted 3.4 million visitors in 2011, down from a record 3.6 million in 2010. About 46% of Xanterra’s revenue came from lodging, 30% from food and beverage, and 14% from retail.
As the federal government and the Park Service struggle with dwindling budgets — the Park Service has identified $3 billion in backlogged critical sewer, road and infrastructure maintenance — partnerships with companies such as Xanterra become crucial.
At the same time, the Park Service is asking for more from concessionaires, especially when it comes to funding big capital-improvement projects such as replacing 400-plus rooms built in the 1960s.
“There is a bigger emphasis on capital investment by the operators,” Todd said. “So the challenge becomes how the government gives incentives and economic return.”
National Park Service concessions specialist George Helfrich said Xanterra bested rival bidders — rumored to include Disney and Marriott — with its environmental ethic.
“One of the primary selection factors was the offerer’s ability to protect park natural and cultural resources when operating,” Helfrich said. “(Xanterra) showed it could do this. In addition, it offered to take some environmental initiatives.”
Good Environmental Record
A hallmark of Xanterra’s ascent to the largest park concessionaire in the country is its environmental record.
Xanterra’s overhaul of Windstar includes ensuring “ours is the greenest cruise line.” Its historic Grand Canyon Railway runs on used vegetable oil. The new units in Yellowstone will be built to high environmental standards, as all of its park structures are.
“It’s a personal mission of mine to preserve the environment,” Todd said.
Anschutz is on board with Xanterra’s green philosophy of treading carefully, Todd said.
“He’s been very supportive, and I think some of his companies have become even greener,” said Todd, noting that the Anschutz Entertainment Group’s properties, such as the convention center and Staples Center in Los Angeles, publish annual environmental-sustainability reports — as Xanterra has done for almost two decades.
Aspen Skiing Co. joins Xanterra as two of the most environmentally aware tourist operations in the country, with large-scale renewable-energy projects and zero-waste goals. Still, organizations such as Protect Our Winters and Aspen Skiing are imploring the most environmentally responsible companies to join political efforts addressing climate change.
“We do admire their work,” Auden Schendler, director of environmental affairs for Aspen Skiing, said of Xanterra. “But I would like them to take advantage of the opportunity to use the national parks, and the clientele, to move the ball on climate by educating the public and advocating for policy the way companies like Intel, GM, Nike and Starbucks are.”
Todd admits Xanterra does not lobby in the political realm, but its environmental scorecard is unrivaled.
“We are definitely not into corporate greenwash,” he said. “We are for real, and our people believe it and they practice it.”
Xanterra Parks & Resorts is the nation’s largest concessionaire of national parks, including Yellowstone, Grand Canyon, Zion, Crater Lake, Rocky Mountain and Petrified Forest national parks, Mount Rushmore National Memorial and Furnace Creek Resort in Death Valley National Park.
Hotels: 29 Rooms: 5,600
Food and beverage outlets: 85
Retail stores: 56, and 6 online
Golf courses: 7
Horse stables: 4
Tent and RV sites: 1,700
Visitors for all parks: More than 18 million
Employees at peak season: 7,500
Annual meals served: 6.5 million